There are so many things at the beginning of the year that raise the stress levels of the American workforce. Many employees suffer from “sunset anxiety” as days get shorter and colder. Plus, the first quarter of the New Year is a critical time when performance evaluations are conducted, bonuses are awarded and promotions are decided. Employees make more career mistakes that could be detrimental to their professional growth. And if you’re launching a start-up, the pressures to avoid mistakes are even greater. But perhaps the greatest stressor of all is “tax-filing anxiety” as we approach tax-filing season.
U.S. States Most Under Stress Of ‘Tax-Filing Anxiety’
Tax season raises stress for people who wonder how much they will have to pay, if they will be audited or the sheer complexities of filing their taxes. A new analysis by Delia Law, a firm of experienced IRS tax attorneys, finds that some U.S. states have more tax-filing anxiety than others.
Using Google Trends, the team at Delia Law collected data on the following five phrases: “tax help,” “how to file taxes,” “tax extension,” “tax penalty” and “IRS payment plan.” They gave each search term a weighted score and used it to calculate each state’s final “filing taxes stress score.” According to the stress scores, the following states are feeling the heat more than others:
- California (76.95)
- Hawaii (72.62)
- New Mexico (71.76)
- Arkansas (70.48)
- Oklahoma (70.29)
- Georgia (69.67)
- Kans (67.81)
- Oregon (67.76)
- Alaska (67.43)
- Rhode Island (67.43)
Californians are the most stressed about filing their taxes. “This could be down to California’s high cost of living, which makes people feel stressed about how much money they might have to pay in taxes,” says Dawn Delia of Delia Law. “The state also has many freelancers and entrepreneurs, who often face additional complexities when reporting income and dealing with deductions.”
Hawaiians are the second most stressed about filing their taxes, scoring four points behind California, closely followed by New York and New Jersey. “Hawaii has some of the highest income tax rates in the nation,” according to Delia, “which can cause financial stress for residents.”
Residents in New Mexico scored third. “Higher poverty rates and lower average incomes could be what makes tax payments feel so burdensome and stressful in New Mexico,” says Delia.
U.S. States Least Under Stress From ‘Tax Filing Anxiety’
Here are the ten least stressed states along with their tax filing anxiety scores:
- South Dakota (49.29)
- New York (52.90)
- New Jersey (54.38)
- Wisconsin (54.48)
- Michigan (55.29)
- Wyoming (55.71)
- Ohio (55.76)
- Illinois (56.67)
- Massachusetts (56.76)
- Minnesota (56.95)
South Dakota is the least stressed about filing their taxes. “This is interesting, as the Progressive Policy Institute names South Dakota as one of the states with the most complicated tax systems in their State Tax System Complexity Index,” Delia notes. “But South Dakota is one of the few states without a state income tax, which does simplify the tax filing process.”
New York is mentioned just outside the top ten among the most complicated state tax systems, according to the State Tax System Complexity Index. However, it comes second-last. “While the system may be complicated, New York offers a wide range of tax preparation services and resources, including free programs, which can alleviate stress for residents,” Delia explains.
She goes on to add that tax-related anxiety shouldn’t be dismissed as something you just have to deal with each year. “It can have a significant effect on your well-being and mental health,” she points out. “It can also affect your ability to file accurately, leading to potential financial problems or fines.”
A Final Wrap On ‘Tax-Filing Anxiety’
Delia recommends one effective strategy to reduce tax-related anxiety: start preparing early. “By gathering all the correct documents and understanding how the system works well in advance, you give yourself time to research anything you don’t understand, and you don’t have the stress of doing everything at the last minute,” she states.
Seeking professional help is another resource she identifies to take the weight off your mind when dealing with tax time anxiety. “A tax professional can simplify complicated issues and guide you through all the nuances of your specific situation,” she says. “Utilizing online resources and tools is a great option if you don’t have space in your budget to hire a professional.”
I have reported on ten five-minute “Microchillers” that can help with tax-filing anxiety. Delia also concludes with a recommendation that the data analysis shows a need for financial literacy resources to help filers reduce tax-filing anxiety and increase their filing confidence.